with profits bond

dunstonh

You are not trapped. At least not after the 5th anniversary of the second one.

If you go execution only or get an NMA to sort it out, I think you will find that withdrawing and re-investing with an increased allocation would cover the tax bill and the possibly most if not all the MVR. CM's current version is better than their old version that you are on. Although their version probably wouldnt come out top on the selection now. Figures would need to be checked and calculated to make sure.

moneytroll

"I think you will find that withdrawing and re-investing with an increased allocation would cover the tax bill and the possibly most if not all the MVR."

But then I would have to start paying these establishment charges all over again on top of the other ones.

Suppose if I surrenderred the capital and reallocated it in their external funds, and switched the (miserable) 3-ish k gains that i made over the 4-5 years to their inhouse property/bond funds, i could theoretically at least escape the tax hit (for now). is this possible to achieve?

would the new policy then pay trail? then i could also do it through a NMA, it wouldn't make a difference, except save me some time/headache...

dunstonh

But then I would have to start paying these establishment charges all over again on top of the other ones.

Not with the right provider you wouldnt and with nma or execution only rebates, it should negate the establishment charge.

would the new policy then pay trail? then i could also do it through a NMA, it wouldn't make a difference, except save me some time/headache...

Yes.

dc1606

read through all these posts and being somewhat lacking in knowledge am confused! I took out WPB with Scottish Widows(20 separate policies) and Scottish Equitable(10 separate policies) in 2000 total investment 40K (+£800 added) split equally between the 2 companies. Profit does not appear to have been good but currently Scot. Widows have no MVR so I'd get c. 22000 if I cashed in. I have been advised (by a Wesleyan advisor) that it would be a good idea to cash in and invest with them as their returns are much better. I am retired- just-the money originally came from Peps we had after the sale of my late father's house and we were advised that WPB would be a safe investment. So what should I do? Any advice most welcome!

EdInvestor

It's so depressing. Retired people with savings already tax-protected in PEPs or ISAs are persuaded by unscrupulous advisors to take it out of the tax protection and put it into a bond in which the returns are actually taxed.We see this over and over again.

Of course the reason is that insurance bonds pay the highest commission in the land. :mad:

All I can suggest is that you take it back out of the WPB if there is no MVA and put as much as possible (14k if married per year) back into an ISA.

Now what did you have it invested in when you had it in the PEP? And what is the position with ScotEq bond? Does it have an MVA?

dunstonh

As Ed says, you are probably being pushed a bond incorrectly. Tied advisers, in particular although not exclusively, oversell bonds.

Getting it out of Scot Widows WP fund is a good move if it isn't costing you anything to do it but you have been fed a complete line of BS from wesleyan. The full retail Scottish Widows bond has a large fund range which Wesleyan could only dream of. The LTSB Scot widows bond is cut down from the IFA version but still has a decent enough fund range. A fund switch may be all that is required but of course no-one earns anything from that and your Wesleyan salesman is not authorised to discuss the Scottish widows product and isn't authorised to make fund portfolio recommendations.

Your best bet if you don't want to research all for yourself is to get an IFA to review the policy and make a recommendation based on the whole market place. You would expect the normal outcome to be £7k into ISA and the rest in unit trusts/OEICs unless you are a higher rate taxpayer, close to age allowance reductions or the bond can be arranged on better terms than the UT/OEIC (which only a discount adviser could do for you).

dc1606

Thanks for the quick replies! We had PEPS invested some in High tech and got out on time- thanks to the advice of the FA involved! Am awaiting a reply from Scot Eq re MVA.

Are we talking 14K into stocks and shares ISA? How risky is that? Quite fancy the idea of doing my own research but not sure how to go about it! Am i being over ambitious here?

The wesleyan bloke said they had regularly given 8% and no MVA and along with NFU were one of the best though IFA s were not allowed to recommend them.

EdInvestor

Are we talking 14K into stocks and shares ISA? How risky is that? Quite fancy the idea of doing my own research but not sure how to go about it! Am i being over ambitious here?

THe bond has been invested in a mix of shares bonds and property, so it's no different.But if you choose your own funds and pick top rated ones, also making sure you get rebates on the charges, you should do much better. You can also add in a lower risk property fund, and perhaps a bond fund ( say 60 % shares,20% each for the other 2?) to reduce risk. "Equity income" funds are a lower- risk way of investing in shares.

Have a look at the Hargreaves Lansdown site for some ideas - they are a discount broker and will rebate the charges.Their site has lots of info and pointers to the better funds. Quite easy to get a good idea of what's what.

https://www.citywire.co.uk/Funds/Home.aspx is another site where funds are rated and you can find the ones with the long performance history ( there are only about 20 outstanding ones so it's quite easy )

https://www.hargreaveslansdown.co.uk
https://www.chartwell-investment.co.uk is another good discount broker.

The wesleyan bloke said they had regularly given 8% and no MVA and along with NFU were one of the best though IFAs were not allowed to recommend them.

Now that is a larf.IFAs not allowed to recommend them?Not allowed by whom?

The fact is hardly anybody recommends With profits funds any more (expect salesman for companies who run them) because they are old fashioned high charging products quite unsuitable for the modern world.

dunstonh

Thanks for the quick replies! We had PEPS invested some in High tech and got out on time- thanks to the advice of the FA involved! Am awaiting a reply from Scot Eq re MVA.

That is not a good enough reason and would be an upheld complaint if you were to make one. PEPs and ISAs are just a tax wrapper. They contain investment funds in exactly the same way as the investment bond.

Basically you have said (with help of the adviser who did it), that you felt the car you had was fast so you replaced it with petrol.

The PEP would have had access to over 5000 investment funds ranging from the very very low risk right through to speculative. It could have been left in a tax free wrapper and had lower risk funds than you were put into.

You had bad advice.

Are we talking 14K into stocks and shares ISA? How risky is that? Quite fancy the idea of doing my own research but not sure how to go about it! Am i being over ambitious here?

Mostly answered above. When I build portfolios, I work on a risk scale of 1 to 10 On that scale, your current investment would be classed as a 6. Probably higher than your realised.

The wesleyan bloke said they had regularly given 8% and no MVA and along with NFU were one of the best though IFA s were not allowed to recommend them.

It's great to hear what some tied agents will say to get business from you. I could give you a report that would slaughter Wesleyan's products and leave that salesman weeping. I shouldn't laugh but that is my current reaction to him saying that.

dc1606

he said Wesleyan didn't allow IFA s access to their funds and that they were a mutual so all profits went to investors,( less salaries of course!) hence better returns.

Thanks for the tips. (some of it obliterated going over other text). I'll look into it.